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Author Archives: Joseph Zujkowski
2012 Year in Review – Part 2
To our readers:
From the Supreme Court weighing in on a chapter 11 case to Bankruptcy Court opinions that may profoundly impact venue selection, many important bankruptcy developments occurred in Restructuring Review’s inaugural year. Below is Part II in our first annual year-end list of the most significant decisions and developments in 2012. This list is presented chronologically. We’d love to hear your feedback as to what you think are the most important events of the year.
We appreciate you visiting Restructuring Review this year and look forward to providing you with frequent insight and analysis in 2013.
Best wishes for a happy and healthy holiday season.
Posted in Analysis
2012 Year In Review – Part 1
To our readers:
From the Supreme Court weighing in on a chapter 11 case to Bankruptcy Court opinions that may profoundly impact venue selection, many important bankruptcy developments occurred in Restructuring Review’s inaugural year. Below is Part I in our first annual year-end list of the most significant decisions and developments in 2012. Part II will be posted shortly. This list is presented chronologically. We’d love to hear your feedback as to what you think are the most important events of the year.
We appreciate you visiting Restructuring Review this year and look forward to providing you with frequent insight and analysis in 2013.
Best wishes for a happy and healthy holiday season. Continue reading
Posted in Analysis
Gaming Alert – Eastern District of New York Rules Poker Is Not Gambling Under IGBA
In a decision that could have a significant impact on distressed gaming companies, Judge Jack B. Weinstein of the U.S. District Court for the Eastern District of New York ruled on Tuesday that poker does not constitute gambling under the Illegal Gambling Business Act (“IGBA”), a federal statute that makes the operation of any “illegal gambling business” a criminal offense. See U.S. v. Dicristina, No. 1:11-cr-00414-JBW (E.D.N.Y. Aug 21, 2012). While poker operations remain illegal under the laws of the vast majority ofU.S. states, includingNew York, the decision may lend support to the argument that online poker operations should be considered outside the scope of certain other federal laws regulating online gaming. Continue reading
Posted in Gaming
Supreme Court Affirms Secured Creditors’ Right to Credit Bid at Plan Sales
On May 29, 2012, the U.S. Supreme Court in RadLAX Gateway Hotel v. Amalgamated Bank, its first significant Chapter 11 opinion in several years, affirmed the U.S. Court of Appeals for the Seventh Circuit’s decision in River Road Hotel Partners v. Amalgamated Bank, prohibiting a debtor from selling assets free and clear of liens under a plan of reorganization without permitting a secured creditor to credit bid. RadLAX resolves a circuit split and reverses prior rulings of the U.S. Court of Appeals for the Third and Fifth circuits endorsing proposed plan sales that did not provide secured creditors with the right to credit bid. Continue reading
Posted in RADLAX
Loose Lips Sink Hostile Bids: Delaware Chancery Court Enforces Non-Disclosure Agreement with Injunctive Relief
In an eloquent account of consensual merger negotiations between Martin Marietta and Vulcan Materials, the two largest players in the domestic aggregates business, Chancellor Leo Strine of the Court of Chancery of Delaware recently prohibited Martin Marietta from using information shared by Vulcan in connection with consensual merger negotiations to pursue a hostile takeover bid and related proxy contest. Martin Marietta Materials, Inc. v. Vulcan Materials Company, 2012 Del. Ch. LEXIS 93 (Del. Ch. May 4, 2012).
The decision offers a real world application of the limitations on use and information gained in non-disclosure agreements. While the court decided this case in the Delaware corporate law context, restructuring parties in and out of bankruptcy frequently obtain information under similar restrictions. Indeed, information may be exchanged in connection with the marketing and sale of assets, or in connection with out-of-court work outs. Recipients of this information should exercise caution when using information obtained consensually to pursue non-consensual or aggressive strategies.
Continue reading
Posted in Analysis
Eleventh Circuit Reinstates Controversial Bankruptcy Court Opinion in In re TOUSA
On May 15, 2012, the U.S. Court of Appeals for the Eleventh Circuit reinstated the controversial 2009 opinion from the U.S. Bankruptcy Court for the Southern District of Florida in In re Tousa Inc., which allowed the estate to avoid as fraudulent transfers approximately $420 million in loans extended to the bankrupt home builder as part of a July 2007 financing transaction. Continue reading
Posted in Avoidance Actions/Fraudulent Transfers
Not So Fast – 363 Sales May Not Be Free and Clear of Future Claims
In recent years, section 363 sales have increased in prominence. According to the UCLA-LoPucki Bankruptcy Research Database, less than 4 percent of all large, public company bankruptcies were resolved by sales of all or substantially all of a debtor’s assets from 1990-2000. However, in the period from 2001-2010, that figure rose to nearly 20 percent – peaking in 2008 when 32 percent of large public cases were resolved by an asset sale.[i] Purchasers like section 363 sales because, among other reasons, they purchase assets “free and clear” of all pre-bankruptcy obligations under section 363(f) of the Bankruptcy Code. However, as 363 sales increased in frequency, courts have begun to limit the free and clear nature of those sales, particularly with respect to future claims that had not arisen at the time of the sale. Continue reading
Posted in 363 Sales
Radlax Review – Summary of Petitioners’ Reply Brief
As part of our continuing coverage of RadLAX Gateway Hotel, LLC v. Amalgamated Bank, this is one of a series of posts summarizing the briefs filed with the Supreme Court. This post summarizes the petitioners’ reply brief, filed with Court on March 31, 2012. In the brief, RadLAX argues that the reading of section 1129 of the Bankruptcy Code by Amalgamated (the Respondent) is flawed and that credit bidding does not always maximize the value of the estate. Additionally, RadLAX denies Amalgamated’s allegations that the proposed plan prohibited credit bidding to benefit insiders or a favored third-party bidder and accuses Amalgamated of working to prevent confirmation of a plan that would benefit all creditors. Continue reading
Radlax Review: Summary of Amici Briefs
As part of our continuing coverage of RadLAX Gateway Hotel, LLC v. Amalgamated Bank, this is one of a series of posts summarizing the briefs filed with the Supreme Court. This post summarizes the arguments in the four amici briefs filed with the Court. The United States government, two groups of law professors and a coalition of financial industry trade groups filed amici briefs. The amici reprise many of the arguments raised in the respondent’s brief and all four argued in support of the position that secured creditors must be allowed to credit bid under a plan that provides for the sale of assets free and clear of liens and encumbrances. Continue reading
Posted in RADLAX
RadLAX Review: Summary of Respondents’ Brief in Supreme Court Credit Bidding Case
As part of our continuing coverage of RadLAX Gateway Hotel, LLC v. Amalgamated Bank, this is one of a series of posts summarizing the briefs filed with the Supreme Court. This post summarizes the respondents’ brief, which urges the Court to affirm the decision of the Seventh Circuit prohibiting a debtor from pursuing confirmation of a plan that provides for the sale of certain assets free and clear of liens and encumbrances without permitting a secured creditor the opportunity to credit bid. Continue reading